47% of 55-64 year-old’s unaware of State Pension deferral

Forty-seven per cent of adults in the UK aged between 55 and 64 didn’t know that deferring the State Pension would deliver a higher weekly guaranteed, inflation-linked pension when starting to claim their pension benefits, according to new research from Just Group.

The retirement specialist revealed 12% of those aged 65 or older had deferred their State Pension, with the figure higher among women (16%) than men (9%) and also more likely among those who are semi-retired (22%), compared to those fully retired (11%).

With coronavirus likely to have impacted the financial plans of many of those approaching retirement, Just suggested it is “especially important” that people are fully aware of all their options.

Historically low returns on cash and bonds make the guaranteed return offered by deferring State Pension more attractive, Just added, particularly given the protection deferral offers against future inflation.

“Deferring State Pension is an important option for the rising number of over-65s in good health and who plan to carry on working,” group communications director at Just, Stephen Lowe, commented.

“It needs to be factored into people’s financial planning in the run-up to retirement so it is worrying that such a high number of people aged 55 to 64 don’t know that there is a degree of flexibility around when and how they take their State Pension.”

Just Group’s research also showed that among those who chose not to defer, 31% indicated it was because they wanted to stop working as soon as they could.

Another 25% suggested they would have had to defer for too long to make the weekly increase worthwhile, while the same number said they did not think deferral was a good idea because the rules might change and they would lose out.

Lowe continued: “Ultimately State Pension deferral can be a useful tool to have in the financial planning kit bag and something that people heading towards retirement should know about.

“Choosing how best to access pension money in order to have the right level of income that is sustainable for a lifetime is not easy and requires long-term thinking. It means balancing the income foregone during the deferral period – more than £9,000 for a full State Pension – against the chance of higher income later, taking into account life expectancy and inflation.”

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